Anyone who has retained an attorney is probably familiar with the billable hour. While the practice of billing based on hours worked is used by other professionals like accountants and consultants, it is best known as the gold standard for compensation within the legal community.
The billable hour is a relatively new phenomenon, and the way attorneys have billed clients over the years has evolved through many forms to where is it today. Back in the 19th century, U.S. legal fees were capped per service by state law, and litigation fees were usually paid by the losing party. By the 1930s, state bar associations began setting minimum fees, so as not to “undervalue” the profession.
Lawyers who charged less than the established base fees could be punished. As legal issues became more complicated and time-consuming over the years, these flat fees became less feasible. Billing by the hour started gaining traction in the 1960s, but it was not until 1975 that the U.S. Supreme Court outlawed the outdated fixed prices, calling them antitrust violations.
Now, the way lawyers are compensated may be changing again.
The attorneys at Kohrman Jackson & Krantz (KJK), a law firm headquartered in Cleveland, are taking on the important and, sometimes, sensitive subject of billing by offering their clients an alternative. They call it the KJK General Counsel (GC) Advantage.
“The purpose of the program is to provide mid-market companies with an outsourced general counsel and to bring more resources from our firm to clients in a transparent way,” says Jon Pinney, managing partner.
Pinney, who was recently elected chair of the convention and visitor bureau Destination Cleveland, also is known for authoring the winning bid for Cleveland to host the 2016 Republican National Convention. As managing partner of KJK since 2015, he keeps a close eye on industry trends and opportunities for clients.
“This is a shift in our industry — we are responding to clients and their needs for a defined legal budget,” he says. “We are evolving with industry inquiries to this alternative billing model.”
Transparency and cost certainty are the foundations of program. Unlike traditional billing models, the program enables clients to set up their legal services for an established monthly fee.
“We have always been happy with the work done by KJK,” says James Romano, chief financial officer of Hillcrest Foods. “Switching to a flat fee allowed us to budget our costs and gave me peace of mind that no matter what legal issues we faced, KJK was going to take care of us. We were a part of the GC program before there was a formal one in place and have loved the results.”
Clients can sign up for different tiers of the program, depending on their needs. On-demand access and priority response are big benefits provided throughout all levels of the program.
Everything is customized for each client with the GC Advantage program. Clients get a dedicated project manager who streamlines communication and ensures projects are completed on time and on budget. An accounting system can also be set up for seamless invoicing and payment suited to the client’s preferences.
Pinney says the technology development has been key to making the program work.
“This has been a long time in the works,” he says. “We have made a big investment, especially on the software side.
“You can’t offer this cost control unless you can do it efficiently,” he adds. “We have had to invest heavily to make it profitable.”
One of these high-tech features is what KJK calls Connective Counsel, a custom client portal providing access to all final documents and forms in real time from a desktop or mobile device. Clients also can access a variety of agreement templates that can be customized to their needs.
Clients who enroll in higher tiers of the GC Advantage program have access to additional budgeting and planning benefits, including discounts, for more complicated services, such as litigation and adversarial proceedings or complex business transactions. Even marketing services like graphic design and digital advertising are available.
While the vast majority of KJK’s clients continue using the traditional billing model for now, Pinney believes that its new program is where the industry is headed.
“Billable hours will always be around; there will always be a need for it,” he says. “But, you will see more of these subscription-based agreements in the future.”
He also believes that it is one of the things that sets the midsize KJK firm apart.
“We have learned to be more efficient,” he says. “Our leadership team is embracing change — not running away from it and nontraditional firm roles. Being smaller allows us to be more nimble.”
Helping clients do business within the massive Amazon platform is one of the practice areas where the firm shows these quick-moving skills.
“We’re doing brand enforcement all over the country — we’re in the middle of the ‘Wild West,’” he says of the often unregulated and quickly evolving sector.
“There are incredible challenges,” he adds. “There could be multiple different jurisdictional issues in each transaction.”
The GC Advantage program is available to business clients throughout all practice areas of the firm, including employment law, corporate services and trademark and intellectual property. Also included are real estate transactions and issues and estate planning.
Pinney handles a sophisticated wealth and risk management practice for KJK. He also has helped companies of all sizes mitigate risk and create blueprints for growth. He brings comprehensive experience to an array of real estate matters, as well.